There’s an interesting trend happening: the sale of American treasuries by European countries, including their insurance companies and pension funds. The volume isn’t high yet but American media did notice this trend (eg, Bloomberg-2026).
The above seems trivial but the devil is in the details:
- Any increase in sales will lower any market price, and/but
- a lower market price for treasuries will increase its effective yield.
In my view, an increase in the effective yield will hurt the American president and his ongoing demands for lowering the nominal yield of American interest. Higher effective rates will jeopardise the (potential) lowering of nominal rates.
Hence, European sales of American treasuries might be viewed as part of an economic war. I doubt that. In my view, those sales underline the unsustainability of American debt, like its future refinancing – let alone repayment. Also see my recent blog: When will American debt become a tipping point?
In my view, USA is getting closer and closer to a bankruptcy because (i) American politicians decrease – rather than increase – taxes, and (ii) future repayment of treasuries is (slowly) becoming an illusion.
Also see this recent Fortune article – Janet Yellen warns the $38 trillion national debt is testing a red line economists have feared for decades – that is part of my recent blog: When will American debt become a tipping point?
In my view, USA is already lowering the US$. A decrease of nominal interest rates would sink the US$ against other currencies (eg, Euro). Just remember the famous 1971 words of American Treasury Secretary John Connally after President Nixon ended the dollar-to-gold convertibility:
“The dollar is our currency, but it’s your problem”. Note: bold marking by me.
The real threat is reaching a tipping point in those sales of American treasuries . Then there will be a flood of available American treasuries. I suppose the American government will then demand its citizens and companies to purchase those treasuries.
The “end” result will be something like:
- a national American “affordability crisis” (eg, my December 2025 blog);
- a new Moscow on the Hudson (eg, part 6 of my related blogs);
- the fall of a former Superpower (eg, my December 2025 blog);
- Europe may need to create a Marshall Plan for American survival.
I doubt that there will be many teardrops.
UPDATES:
- Reuters, 28 January 2026:
“Trump said he’s not concerned about the currency’s decline and that’s after the 10% fall in 2025. Trump’s strategy is simple. Run the economy hot into the mid-terms and get ahead of the Fed that appears reluctant to cut by letting the USD slide. Trump is green lighting selling the dollar.” Dollar sinks to four-year low, Trump brushes off the decline; - Algemeen Dagblad, 28 januari 2026:
“Steeds meer beleggers lijken tot de conclusie te komen dat zij de Amerikaanse overheid niet langer vertrouwen met hun kapitaal. De uitverkoop wordt door analisten gezien als een historisch kantelpunt, waarbij de status van de dollar als ultieme veilige haven ernstig en mogelijk blijvend wordt ondermijnd.” Dollar stort in tijdens historische verkoopgolf, vertrouwen in VS verdampt: ‘Systeemschok’;
Teardrop (1998) by Massive Attack
band, lyrics, video, Wiki-band, Wiki-song
Note: all markings (bold, italic, underlining) by LO unless in quotes or stated otherwise
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